I can come at this from a few angles, and probably will, in the coming months. Today, just one piece of the puzzle to address: efficiency for both the advertiser and Google.

First, some background assumptions:

1. New advertisers (and unevenly-engaged advertisers returning to refresh their memories) do keep pouring into the space, especially internationally. The optics of high minimum bids don't look good. They're alarming and off-putting to newbies.

2. Google likes its black box, and likes to avoid black-white distinctions. Building very flexible (read: confounding) architecture helps Google achieve a number of goals. And even those goals are subject to change.

3. Yet Google faces pressure for additional disclosure. So for every layer of complexity they build in, they try to offer up at least an equivalent step forward in terms of disclosure.

4. At Google AdWords, CTR is king. Clicks drive revenue, and continue to be a reasonable proxy for relevance. This is the biggest constant since 2002.

5. The platform as it stood at version 2.6 (my nomenclature), contained pockets of inefficiency. It did a good job of ramping up the "quality" bar, to the delight of users, but as even Sergey sheepishly admitted to investors, they might have "overtightened" the calibration of the platform, showing too few ads for advertisers', Google's, and investors' taste. The new release is intended to offer Google the ability to "untighten" selectively, without giving anyone the satisfaction of being able to point definitively as to exactly how that is being achieved.

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Further detail:

The "pockets of inefficiency" buried in the fixed minimum bid regime were evidently ferreted out by smart Google engineers who realized that fixed minimum bids for keywords were too rigid. Rather than determining that a keyword in a given account should be "all on" or "all off" no matter what the context, Google has designed the new system to give keywords a fighting chance to show ads in all cases. (The official explanation is that no keyword is ever technically inactive for search.)

Quality Score is now determined in real time, per query. But wait. Don't think that means the only negative thing that happens to a Low-Quality-Score keyword is that it's relegated to a Very Low Ad Position. No, it can still be inactive at query time if it fails to meet what Google is calling a Bid Requirement. (Among other things, this gives Google an excuse to charge high prices for clicks in some instances, even if no other ads are showing up on the page.) What's different in this version is that the same keyword is eligible to be re-evaluated for the next query, and the one after that. So like the parrot in the sketch, it's not dead, just resting.

Let's be especially clear about this much: keyword quality (whose formula is outlined in Google help files, but clearly rests on measures of CTR history as well as predicted relevancy, especially for newer accounts with less data history) will determine both where your ad ranks for a given query, and whether it is eligible to show up or not at query time. So "fighting chance" and the "chance you might show up" even on a low quality keyword, some of the time, doesn't mean the same as "free for all." Advertisers aren't being encouraged to "go to town" with unrelated keyword experiments just to "see what sticks" -- in fact, that tactic is as bad as ever, because this can hurt account-wide quality.

Through all of the complexity of the explanations you'll read, then, and the potentially excessive focus on some tweaks in reporting (scale of 1 to 10 transparency for Quality Scores) and projections (First Page Bid estimates), the efficiency angle, and Google "shading" its quality initiative to make it more flexible and subtle, is the main story here.

And not a moment too soon, I'm guessing. By Google standards, the months of July and August were likely slower than they or investors would like. By notching up revenue in September, Google can turn in a respectable Q3. (Especially internationally, I'd expect to see click arbitrageurs given some respite, and getting a chance at more clicks - raising Google's revenue, but lowering overall search quality.) By the time things are off to the races for Q4, Google can always tighten things up slightly from a quality standpoint, and raise prices at the same time. If you asked, I'd predict steady-looking year-over-year revenue growth in Q4, with a bump in profit margins. Investors will cheer, and Google (GOOG) stock will head back to $700.

Oh -- perhaps I should explain in case they're not quite a household name yet.

It's time for the annual installment of the Infinite Regression Awards. We're handing out the hardware to the best self-referrers in search, Web 2.0 and beyond. Ever since the movie Scream broke down the rules of horror as it unfolded on the screen back in '96, deconstructing one's self has been oh-so chic.

Without further ado, Traffick presents to you the Reggies.

Best ad for ads – Google AdWords.com. I guess they narrowly edged out Perry Marshall’s “Beat the AdWords System” in the bidding war for position 1. I once had that coveted spot...until my quality scores mysteriously went south, that is.

Best movie about a movie – Tropic Thunder. Left no stone unturned in offending every demographic possible. Plus it had those hilarious fake previews at the beginning!

Best Facebook group about Facebook: “Thanx to Facebook I’ve Been Reunited With Ppl I Never Wanted to See Again.” Funnily enough, most of the people I never want to see again have joined that group. Runners up: “All I Do is Check Facebook All Day,” “Facebook Killed MySpace.”

Best song about a song “Your Song” by Elton John still gets my mom every time.

Best blog about blogging about blogs: Technically, we posted last year on blogging about blogs. 2009 award for best blog about blogging about blogging about blogs, here we come!

Best departure from departing: Bill Gates. He’s retired like Brett Favre is retired.

Most overhyped story on overhype: the hype for The Dark Knight became a story of its own.

Best search results about search: I asked Powerset “what is Google?” It brought back plenty of info on Google, from analytics to PageRank, but Google Search conveniently fell to #8 on the results page.

Worst landing page about landing pages: Is it just me or is Ominture looking a bit cluttered?

Well, we better wrap the awards up before I start handing out awards for awards. Until next year!

On today's PPC Rockstars segment with David Szetela, I'm on with Kevin Ryan and Mary O'Brien to ask why the heck all the industry banter is still about SEO. Not that we're whining or anything! Have a listen here at Webmaster Radio.

Is this how it goes? The PR machine starts to roll *after* you've made more money than you'll ever need?

This just in: Google is seeking AdWords testimonials. Success stories. Some that you might even want to "share with the press." (Did someone attend a marketing seminar over there?)

It's beyond doing good stuff with campaigns, though. It's about how AdWords "changed your life". (AdWords is lucky it is not a mobile device, or, for every one part "it changed my life," you'd see ten parts of those Corona ads with someone deciding to chuck that sucker into the ocean, and kick back.)

A. Um, I'd like to think I was that before AdWords. But while we're on the subject of wild west entrepreneurialism, remember the good old days when we could bid on all kinds of keywords without thought to quality scores and predictive algorithms?

Q. Quit your day job?

A. I have never had a day job. At least, not prior to AdWords. So thanks for nothing, AdWords, I now have a day job. My parents are very proud.

I just got through a bit over half of Bryan Eisenberg and John Quarto-vonTivadar's Always Be Testing: The Complete Guide to Google Website Optimizer, on the plane on the way from Toronto to San Jose. In the last hour of the flight, I quickly scanned the remaining chapters. Funny and all too familiar story: I left the book in the back of the seat when I got off the plane, so I expect United Airways personnel, or the next passenger, to begin feverishly improving their online presence any day now.

The "hard" sections of the book are the deep underpinnings of consumer motivations: personality types, goals, personas, etc. Anyone who has attended an Eisenberg conference session will have glimpsed these. These are insights worth digesting carefully - and are the most difficult to put into practice. Professionals only, please.

The inspiring sections come early on, when the authors simply do a great job of making the case to test at all. In my mind, they're rivaled only by Seth Godin in subtly shaming marketers for allowing organizational inertia for failing to test. I particularly liked the sentence that mentioned that you can get your testing motor running by choosing a key landing page to drive paid search traffic to. (Google Website Optimizer will measure conversions from all types of traffic, but it's clear that you can accelerate your testing towards profitable conclusions by sending more relevant paid traffic to the test page in a fast spurt. Thus Google doesn't tie use of its free product to use of Google AdWords, but they certainly stand to benefit from increased advertiser confidence.)

The actionable sections are all over the place. In the first half of the book you get a nice tactile sense of what you can test right now: the key drivers that can vault a small company's conversion rates up 100%, and a large company's page performance up by 25% -- assuming they didn't suck in the first place, in which case improvements might even be greater.

There's also an interesting discussion of offbeat types of testing that measure outcomes other than simple conversions: divergent paths; specific clicks; time on site, etc. Although web analytics folks have often churned through such data and pontificated in the general direction of management, it's safe to say few have kicked it up the required notches to make those stats into actionable tests. Marketers like you, me, and the authors are evidently going to be stretching the capabilities of Google Website Optimizer well beyond its initial build. The good folks at Google Analytics and Google Website Optimizer have produced a robust initial product, but Eisenberg et al. won't just pat them on the back and leave them there. This amazing free tool is no doubt going to add a whole bunch of new capabilities on top of its existing solid core.

Cool examples abound. The small world of conversion science already holds the keys to much improved e-commerce performance, in a kind of database of ideas (not certainties... that's what they are, ideas about what you can try). Take Dell changing the phrase "Learn More" to "Help Me Choose," and then revamping some of the subsequent content accordingly. Which approach do you think works better to close a sale?

There are reasons testing aficionados will continue to run up against organizational resistance. Implicit web developer assumptions about information architecture often stop at pleasing but ultimately non-closing types of user patterns. Eisenberg et al. are no slouches at information architecture -- indeed there is a meaty section on designing better categorizations in this book. But the default initial build (or three) of a large company's site might still tilt too much toward: "put our information out there, install a cart system, and hope they buy." Conversion science is about asking for the sale, in the granular context of particular site visitors and their needs. And no, it doesn't always have to be a sale. But if it's not some kind of measurable event, then it's gossamer (ain't it?).

Comprehensive "catalog style" sections on the elements and minute sub-elements that you could test serve as a nice complement to the tactile "here's some basic ways to test" sections. Not to hype ya, but this little catalog of testing ideas could be worth tens or hundreds of thousands of bucks to your company. Eisenberg has generously open-sourced them.

I bumped into Bryan just minutes after getting off the plane, and he stressed that while the catalog-style section of testing elements is overwhelming on the surface, the book is meant to be the type of reference that sits on your desk to be used whenever it's needed. I'll certainly have one on mine, and copies for my team... after I replace the one I just left on the plane, of course!

The search marketing industry has got itself some serious headcount. In the past eight or so years since Danny Sullivan started the Search Engine Strategies conferences, the SEM community has also moved into a more comfortable relationship with the marketing and advertising world in general. As such, we see a healthy evolution towards overlap in roles, players talking across disciplines, and strategy as a much bigger part of the 2008 SES program, hosted by Kevin Ryan.

Search technology itself has also improved steadily - especially if you factor in the increased difficulty level of scale. Perhaps not so much if you place higher expectations on Google proportional to their $160 billion (GOOG) market valuation (sorry AAPL, that was a one-day blip), or proportional to their massive headcount. But still, search has improved in evolutionary if not revolutionary fashion. This has led people to alter their behavior; when searcher expectations are high, they search more, and more confidently, including looking for hard-to-find e-commerce items. This has led to a virtuous circle for search engine companies and e-commerce players, albeit in what looks increasingly like a winner-take-all environment.

Without all this evolution in search quality, the Long Tail hype wouldn't have any substance to it in practice. The Long Tail is what we used to call the haystack. Consider that giant haystack and searchers' high expectations of finding exactly what they need a permanent condition of today's business environment. A few companies think they're immune from all this. Most understand they need aggressive and measurable forms of direct response mixed in with subtle forms of brand management, to go with (or in some cases, to replace) the broad brand-writ-large approach.

The adversarial, often-zero-sum, "games" of organic search visibility and paid search placement auctions have evolved and become exponentially more difficult to win. So there remains a stark reality for companies playing in 2008 with 2000 or 2002's tactics: unless you get up to date, you're whistling in the breeze, friends. So it's a great idea to attend the shows to keep those cobwebs at bay.

I haven't missed a single SES San Jose: that means this will be my sixth SES San Jose, and my sixth Google Dance. That puts me in the club of diehards of diehards. And considering the mayhem we've gotten up to -- we probably should be dead by now. Some of us have mellowed slightly.

So that's another (or should I say perhaps the) undeniable benefit of SES Conferences: the events and networking opportunities. You do business with, and because of, people who remember you in a deep context. It's fun to attend the big events, but hosting your own intimate or special purpose event, as we found last year with Mona's book launch party, can be a good way to take time out to connect and reflect.

This year, why not check out the Internet Marketer's Charity Party, hosted by a variety of industry luminaries? A nice way to take a hectic week and pause to consider our obligation to help others.

Those who know me all to well are aware of my irritating resistance to the word "pop up" in connection with Google AdWords ads.

That was one of my many suggested corrections to a recent story on Google ads over at The Register, for example.

My take is that slipping the term "pop up" in journalistic pieces about Google (as in, "and for only a dollar or so, Mr. Neufeldt's ad would pop up on Google when searchers typed the words 'truck tires'...") is part of an ongoing, insidious campaign by sellers of traditional advertising to associate (still, to this day) online targeting with things that go bump in the night. (Or something even worse, like annoying pop-ups.)

So when the casual conversation here in the Traffick Living Room on a Saturday turned to my spouse's observation that "I don't see Google ads pop up very often when I use the search engine in South Africa," I had to interject: "bup! bup! bup! waait a minute!"

I know, it's irritating to be around me, but we can't take this shit lying down. :)

Ads on Google searches "appear," "show up," "come up," or "are displayed." Or are simply there. They never pop up!

Jeremy Toeman received a notice from UMG regarding his posting of a video on YouTube that included copyrighted content (U2's Beautiful Day) in the background. The offer from the copyright owner, facilitated through YouTube, basically said, go ahead and leave the video up if you wish, but we'll be showing advertising on it.

To some this might sound heavy-handed; to others, a nice compromise. I tend to think the latter. As Toeman writes, "I'm basically being encouraged by a copyright owner to user their content for my purposes (fun) and yet meet their basic business needs as well (profit)."

Jeff Jarvis, apparently writing a book called What Would Google Do?, must have Michel Foucault spinning delightedly in his grave, as he has just discovered post-modernity! Jarvis asserts that "the Internet" is what "... opens up creativity past one-size-fits-all mass measurements and priestly definitions."

I understand that as a journalism professor whose job apparently hinges on the lucrative current trade in old-media-bashing, Jarvis sort of has to say this stuff. "Curmudgeons" don't get invited to a lot of parties. And I gather that Jarvis is the sort who likes to be invited to a lot of (new economy style) parties, else he'd just hang onto his tenure and sleepwalk his way through the ivy-encrusted halls.

But like other champions of emerging media, is he laying it on just a tad thick?

Jarvis claims that "Internet curmudgeons argue that Google et al are bringing society to ruin precisely because they rob the creative class of its financial support and exclusivity: its pedestal." Ah yes, the pedestal thing. Why hire trained, overpriced architects to build that new museum or skyscraper? Let's crowdsource it. It'll be cheaper, more efficient, and most of all, exhilaratingly non-pedestal-ish! The only downside: if you hate it, you have no one to point the finger at.

Got yourself a legal problem? Just bring your laptop into the courtroom with you, and plug in an app that will let a global group of legal enthusiasts construct your next argument. Bye, bye, legal profession! Goodbye to all the professions! And while we're at it, let's eliminate professionalism, period! (Hmm, am I sounding curmudgeonly?)

But get serious for a second. The creative class? There is a whole slew of curmudgeons sitting around defending ... who again? Show me one of these curmudgeons. And what creative class? Is Jarvis referring to Richard Florida's creative class, from Rise of the Creative Class et al.? This is merely a broad-based statistical group making up upwards of 30-40% of workers -- so hardly a group that Florida lauds as an enlightened few. That Creative Class tends to flock to mega-regions, tolerant and fun places, etc. Nearly all of Florida's work, including his recent Who's Your City?, is important enough for anyone to read. Jarvis hasn't bothered, even though he punts the concept around for sport.

Stunningly, at the end of his post, Jarvis notes that he never managed to crack a Richard Florida book on the creative class, though he purports to have at least bought one. And the reason it's OK to torch imaginary arguments not really made by statistically-grounded authors like Florida? Because "books are such an echo chamber." Ha ha. Take that, books! Said the author of a new book. Deliciously decadent irony.

So if it isn't Florida that defends some kind of straw man creative class, then who does? Who's dumping on the explosion of pro-am culture *because* it robs a rightful creative class of their deserved role in society? No one? Hardly anyone, then. Some people who rip into the Huffington Post, perhaps; I'm at best dimly aware of these people because I only take occasional peeks into that particular echo chamber (blog-bashing and blog-basher-bashing, etc.).

I'll be looking forward to, um, reluctantly reading Jarvis' book... but as he is a self-described "Internet triumphalist," his book sounds like it may be a flavor of Kool-Aid that's already in oversupply.

An outdated and naive hat tip to the "link economy," our "culture of links" that is a "meritocracy" (yes, that was Google's idea in 1998, but has anything changed?) isn't helping. Jarvis goes on at some length about how the crowd can ferret out merit (yawn), but I don't think you have to be a curmudgeon to think that at some point, online voting systems and online culture can drag us into a kind of perpetual, unreflective adolescence. But more importantly, they can be gamed.

We're on the cusp of yet more progress in the use of technology to gather data and opinions, some of that used in a more tailored bid to inform and shape public policy. (A good friend of mine is putting together a citizen input platform right now -- there will be no shortage of fun developments like this.) But Internet technology aside, models of direct democracy and improved decision-making have merited serious debate in academic and political circles since the 1960's. Is there really a need for breathless, one-way evangelism in this effort? There will be plenty of hurdles, corruption, shenanigans, victims, and hiccups, and an ongoing battle with the garbage-in, garbage-out problem. Jarvis sounds like he's just encountering this debate for the first time -- from a peculiar angle that post-dates the death of Kurt Cobain and the founding of Yahoo.

To me, the sinister sides and hucksterism that can come with [Whatever it is that Jarvis plans to say Google would do] are as real as the wins. I find it galvanizing to watch society opening up, and to watch formerly inefficient industries give way to smarter models, but I hardly sit back and cheer when perfectly talented writers and producers of TV shows (to use one example) are threatened with crowd-sourcing and Reality-TV-ification, in order to drive down their pay. And hey, I think we've all learned that you can automate 75% or more of radio... that we're no longer in the spell of the Big Network Anchors... and that many of the other talent-worshiping Grand Narratives are being unwound. But then there's Howard Stern, asking for and getting a quarter of a billion dollars to be Howard Stern, also proving the opposite point.

The no-doubt-curmudgeonly counter-book to Jarvis' book might well be entitled "Beware the Tactical Uses of Internet Triumphalism." And if you're the straw man in Jarvis' sights: duck for cover!

We’re all probably familiar with Google’s kitschy new gadget now – you know, the one that essentially combines Google Maps with Google Earth? The one that lets us map the world via street level – no, eye level – photographs?

Well, given that Street View lets us see things in fine detail, including text on signs and storefronts, if a given camera has high enough resolution, it was only a matter of time before someone tried to top the Super Bowl proposal stunt.

Does Street View raise privacy concerns? Yes and no. Faces are blurred to maintain anonymity, but Street View still captures plenty of personal moments, as evidenced by this fascinating catalogue of freeze frames compiled by SearchEngineLand.

Yet while Silicon-Valley based companies churn out one new invention after another, championing their ability to make the world more transparent and accessible (whether it's through blogging, YouTube, Google Earth, Twitter, or Street View), legit privacy concerns sometimes get swept under the rug. I feel the sorriest for anyone in off-the-grid, unofficial professions who could get in trouble if spotted repeatedly operating in the same places (Musicians? Scalpers? Mimes? I'm not sayin', I'm just sayin').

Don’t get me wrong – Street View brings some fascinating benefits to mind. It’s no secret that it can potentially catch criminals in that act (perhaps Google could earn privileges to “de-blur” any activity that appears illegal). It also could not only spot traffic, but reduce it. Street View users may view a snapshot of a given street before hopping in their cars, realize that the traffic is awful, and choose public transportation instead. Also, high-rez photo zones could be a dream come true for shoppers. Love that little family run boutique that doesn’t have a website? Never fear – Street View can zoom in and help you read the sale prices in the window. Same goes for restaurant menus.

The same features that make Street View appealing, however, could prove detrimental to the economy. Take the film and theatre business, for example. The Dark Knight is devouring box-office records daily, and excited audiences are still lining up out the doors of multiplexes night after night to catch the Caped Crusader. If you make the trip to the theatre and find yourself in line, you’ll likely say “well, we’re here now, we made the effort, no point in turning back.” If you used Street View in advance and saw the line around the corner in a photo, though, you may have opted for sitting at home watching Dancing with the Stars instead. And forget window shopping – what about window tourism? Could people take a frame-by-frame virtual stroll around the gates of BuckinghamPalace instead of paying for the tour?

I also wonder how Street View, should it become a major hit, could affect advertising. If the Google worker used a sign to make his proposal legible, what steps could retail outlets and restaurants take to stand out on Street View? A city block lined with billboards and giant mascots is quite the image, eerily similar to a homepage laden with competing pop-up ads.

Most of the aforementioned concerns will only come into play should Street View achieve widespread use. Technologies may develop to a point at which we reach a crossroads and must decide if they do in fact serve the greatest good, offering more pros than cons.

For now, we can at least say that human contact may have taken one more step backward thanks to this innovation. What else can we say about the Google man’s proposal? At least the sporting-event proposal guy, as cheesy as he was, had the guts to do the deed in person. He’s a dying breed.

So basically, what SearchMonkey does is allow publishers to push their customized content look and feel right into the Yahoo Search results. Well, not push, actually, but make available, based on open formats. So for users who opt into the widget for any given company's rich content, if the listing for that content comes up in search results, custom look-and-feel info included. So if it's a Yelp review, you get a bit of the Yelp "richness, look, and feel" right on Yahoo.When I search for "g h johnson toronto," a review from HomeStars comes up in the SERP's. The user (if they have opted in) sees a small inobtrusive HomeStars logo. It goes no farther than that unless they also click on the down arrow. This provides custom, rich information without leaving the search results page: our custom star rating icon, the average rating, a synopsis of the most recent review, and three links so that a searcher could then click for photos, all reviews in that city, or top rated companies in the furniture category.

It's pretty cool Yahoo is allowing for this level of richness for custom content right in the SERP's, but in a mostly opt-in environment. This could go in any number of directions, but for now, unsurprisingly, they are taking a cautious route.

Yahoo is now automatically enabling formatted Yelp, LinkedIn, and Yahoo Local results via its SearchMonkey rich data / open formats platform. I'm a big fan of SearchMonkey and happy to see Yahoo forging ahead with it. P.S. Yahoo should acquire Yelp and LinkedIn.

This dude is dumping Outlook for web-based email. Welcome to the club, finally! It's interesting to note from his article that major web host Dreamhost encourages all of its customers to stop using their email servers and to use GMail instead. This drastically reduces the number of support tickets for Dreamhost. Sorry, I mean DreamHost.

I'm so tired of going back and capitalizing the first letter of the second word on every two-words-as-one-word company or product name, especially when that makes it wrong...